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The FCA recently published a list of considerations for firms thinking of using third party technology banking solutions. This has attracted widespread commentary from within the industry – mostly from advisers or end users – but what does this mean for suppliers of critical technology solutions to regulated firms?
Inevitably regulated firms have comprehensive internal policies and checklists they are required to follow before any business operation, let alone a critical one, may be outsourced. Anything less is likely to put the firm in breach of regulatory obligations (including SYSC 8.1). The complexity and time it takes to navigate and comply with firms’ procurement processes should come as no surprise for technology vendors, and nor should the FCA’s considerations.
While regulated firms remain accountable for their compliance, the FCA considerations reinforce how important it is for technology suppliers to avoid being seen as a regulatory risk. To achieve this, they must make efforts to appreciate the applicable regulatory requirements affecting customers, and structure their products and delivery models in a way that facilitates and enhances firms’ abilities to remain compliant and, importantly, to demonstrate compliance.
There is no easy route to becoming an approved supplier of critical technology to regulated firms. Suppliers who are approved are likely to have invested and taken proactive steps to align their products, services and business models to their customers’ evolving regulatory requirements.
Equally, suppliers who have developed products with this approach usually encounter fewer procurement difficulties. What’s more, technology vendors whose products are intrinsically adaptable to future regulatory changes are naturally more appealing to firms.
The FCA’s list of considerations is a reality check for suppliers. Those who haven’t considered them, or who supply technology in a way that does not promote or facilitate regulatory compliance, will face an uphill battle to catch up – let alone to stay ahead – of the ever changing regulatory environment. Those who have kept up must continue to invest in regulatory and market awareness.